In today’s briefing:
- Interpreting Circulating Supply Effects on Token Valuation: MC Vs FDV
Interpreting Circulating Supply Effects on Token Valuation: MC Vs FDV
- Fully Diluted Valuation (FDV) and Market Capitalisation (MC), while subject to various externalities, are often used as reference points for token valuation. However, this approach is ambiguous for early-stage tokens: Small circulating floats and speculative momentum often inflate FDV, creating uncertainty over whether to benchmark against peers’ FDV or to adjust for differences in circulating supply.
- We analysed over 800 tokens, regressing circulating supply (%CS) against both Fully Diluted Valuation (FDV) and Market Capitalisation (MC), with results segmented by project maturity and time.
- Main finding: Throughout most of a token’s life, MC explains valuation behaviour more reliably than FDV. The market anchors on circulating supply rather than total theoretical value.
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